During the webinar, Louise Jeffreys and Mel Holman answered a range of questions from business owners about due diligence, FCA expectations, governance, and preparing for a business sale.

Below is a summary of the questions discussed during the session.

FCA notifications and timing

Q. When should SUP15 notifications be submitted?

A. SUP15 notifications should be submitted once a business is actively preparing for a sale and engaging potential buyers. The notification keeps the FCA informed before transaction activity progresses.

Q. Do firms need to wait for FCA approval after submitting a SUP15 notification?

A. No. The notification is informational only. If the FCA has concerns, they will contact the firm directly.

Change of control and transaction process

Q. When is a change of control application submitted?

A. Change of control applications are usually submitted after due diligence has been completed and before the transaction completes.

Q. Can a business complete before FCA approval?

A. No. Completion cannot take place until FCA approval has been granted.

Q. What is the difference between an asset sale and a share sale?

A. In a share sale, the buyer acquires the company along with its liabilities and regulatory responsibilities. In an asset sale, the buyer acquires selected assets, such as clients and revenue, without taking on historic liabilities.

Client communication and consent

Q. Can clients be transferred using negative consent?

A. No. Positive client consent is required before clients can move to a new regulated entity.

Q. When should clients be informed about a sale?

A. Clients are usually informed during the transaction process and before servicing arrangements transfer to the acquiring business.

Annual reviews and file evidence

Q. How far back should annual review records go?

A. Typically, buyers review five to six years of annual review evidence, although older records may be requested depending on the advice history.

Q. What is most important in client files during due diligence?

A. Buyers look for clear suitability evidence, documented advice rationale, consistent file notes, and evidence that annual reviews were completed or offered.

Capital adequacy

Q. Why is capital adequacy important during a sale?

A. Capital adequacy can affect deal structure and valuation, particularly in share purchases where regulatory capital remains within the business.

GDPR and privacy notices

Q. Should firms update privacy notices before a sale process?

A. Updating privacy notices to reference potential business sales and due diligence activity can help strengthen GDPR processes during a transaction.

Governance and buyer expectations

Q. How do buyers assess culture and governance?

A. Buyers review governance evidence such as meeting records, compliance oversight, training activity, complaints handling, and consistency of client outcomes.

Operational readiness

Q. What operational issues commonly create problems during due diligence?

A. Common issues include fragmented systems, inconsistent documentation, missing records, and adviser data stored outside central systems.

Final thoughts

Preparing early can help reduce delays, improve buyer confidence, and create a smoother transaction process.

If you are considering a sale, contact Gunner & Co. for a free consultation and confidential discussion.